Vatican's new bank chief has military ship links

Pope Benedict XVI delivers his blessing after an audience with the Roman clergy in the Paul VI Hall at the Vatican, Thursday Feb. 14, 2013. Benedict XVI is continuing his farewell tour with an off-the-cuff meeting with Roman priests, an annual encounter that has taken on poignant new meaning with his impending resignation.The Vatican has said Benedict would reflect Thursday on his personal experiences as a young theological expert attending the Second Vatican Council, the 1962-65 meetings that brought the Catholic Church into the modern world. (AP Photo/Alessandra Tarantino)
— AP

Pope Benedict XVI delivers his blessing after an audience with the Roman clergy in the Paul VI Hall at the Vatican, Thursday Feb. 14, 2013. Benedict XVI is continuing his farewell tour with an off-the-cuff meeting with Roman priests, an annual encounter that has taken on poignant new meaning with his impending resignation.The Vatican has said Benedict would reflect Thursday on his personal experiences as a young theological expert attending the Second Vatican Council, the 1962-65 meetings that brought the Catholic Church into the modern world. (AP Photo/Alessandra Tarantino)
/ AP

Photo released by DC Advisory on Friday, Feb 15, 2013 shows the company's former CEO Ernst von Freyberg. Pope Benedict XVI signed off on one of the last major appointments of his papacy Friday, approving the German lawyer and financier to head the Vatican’s embattled bank. Von Freyberg has solid financial and Catholic credentials as a former investment banker and member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. (AP Photo/DC Advisory, HO)— AP

Photo released by DC Advisory on Friday, Feb 15, 2013 shows the company's former CEO Ernst von Freyberg. Pope Benedict XVI signed off on one of the last major appointments of his papacy Friday, approving the German lawyer and financier to head the Vatican’s embattled bank. Von Freyberg has solid financial and Catholic credentials as a former investment banker and member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. (AP Photo/DC Advisory, HO)
/ AP

Vatican spokesman Rev. Federico Lombardi meets the media during a press conference, at the Vatican, Friday Feb. 15, 2013. Pope Benedict XVI has signed off on one of the last major appointments of his papacy, approving a German lawyer to head the Vatican's embattled bank. Ernst Von Freyberg has solid financial and Catholic credentials as a member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. The Vatican said Von Freyberg had been appointed by the bank's commission of cardinals and that the pope had "expressed his full consent." (AP Photo/Andrew Medichini)— AP

Vatican spokesman Rev. Federico Lombardi meets the media during a press conference, at the Vatican, Friday Feb. 15, 2013. Pope Benedict XVI has signed off on one of the last major appointments of his papacy, approving a German lawyer to head the Vatican's embattled bank. Ernst Von Freyberg has solid financial and Catholic credentials as a member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. The Vatican said Von Freyberg had been appointed by the bank's commission of cardinals and that the pope had "expressed his full consent." (AP Photo/Andrew Medichini)
/ AP

Vatican spokesman Rev. Federico Lombardi arrives to meet the media during a press conference, at the Vatican, Friday Feb. 15, 2013. Pope Benedict XVI has signed off on one of the last major appointments of his papacy, approving a German lawyer to head the Vatican's embattled bank. Ernst Von Freyberg has solid financial and Catholic credentials as a member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. The Vatican said Von Freyberg had been appointed by the bank's commission of cardinals and that the pope had "expressed his full consent." (AP Photo/Andrew Medichini)— AP

Vatican spokesman Rev. Federico Lombardi arrives to meet the media during a press conference, at the Vatican, Friday Feb. 15, 2013. Pope Benedict XVI has signed off on one of the last major appointments of his papacy, approving a German lawyer to head the Vatican's embattled bank. Ernst Von Freyberg has solid financial and Catholic credentials as a member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. The Vatican said Von Freyberg had been appointed by the bank's commission of cardinals and that the pope had "expressed his full consent." (AP Photo/Andrew Medichini)
/ AP

This undated photo provided by DC Advisory on Friday, Feb 15, 2013 shows the company's former CEO, Ernst von Freyberg. Pope Benedict XVI signed off on one of the last major appointments of his papacy Friday, approving the German lawyer and financier to head the Vatican’s embattled bank. Von Freyberg has solid financial and Catholic credentials as a former investment banker and member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. (AP Photo/DC Advisory)— AP

This undated photo provided by DC Advisory on Friday, Feb 15, 2013 shows the company's former CEO, Ernst von Freyberg. Pope Benedict XVI signed off on one of the last major appointments of his papacy Friday, approving the German lawyer and financier to head the Vatican’s embattled bank. Von Freyberg has solid financial and Catholic credentials as a former investment banker and member of the Sovereign Military Order of Malta, an ancient chivalrous order drawn from European nobility. (AP Photo/DC Advisory)
/ AP

VATICAN CITY 
The Vatican was drawn into a new controversy Friday after acknowledging that its bank's new president is also chairman of a shipbuilder making warships - a significant conflict for an institution that has long shunned ties to military manufacturing.

The Vatican announced to great fanfare that Pope Benedict XVI had signed off on one of the last major appointments of his papacy, approving Ernst von Freyberg as president of the Vatican's bank, officially known as the Institute for Religious Works.

The Vatican spokesman was caught off-guard, though, when a journalist noted that the German shipbuilder von Freyberg chairs, Blohm + Voss, is known for its military ship construction.

The Rev. Federico Lombardi demurred and defended the selection. He later issued a statement saying von Freyberg chairs a civilian branch of Blohm + Voss, which repairs and transforms cruise ships and builds yachts - but that the company is currently part of a consortium that is building four frigates for the German navy.

The Vatican and its bank have deep-rooted traditions of steering clear of investments in companies that manufacture weapons or contraceptives, in line with Catholic Church teaching.

Michael Brasse, spokesman for Blohm + Voss in Hamburg, said that von Freyberg is chairman of the executive board of Blohm + Voss Shipyards, a unit that concentrates on building civilian ships.

But before Blohm + Voss Shipyards and other non-military units of Blohm + Voss were sold in 2011 to Star Capital Partners, its military shipbuilding unit, Blohm + Voss Naval, had contracted with the German Defense Ministry for four new frigates. Blohm + Voss Naval subcontracted the actual construction of those vessels to Blohm + Voss Shipyards.

Though Blohm + Voss Naval is now known as ThyssenKrupp Marine Systems GmbH, and is entirely separate from the other Blohm + Voss units, the Shipyards unit is still constructing the frigates under the legacy contract.

After they are built, however, the company plans to concentrate entirely on non-military ships. Von Freyberg will remain its chairman while working for the Vatican.

"The focus of the business is for yachts, and on the repair side for cruise ships or the offshore oil and gas industry," Brasse said.

Lombardi pointed out that Blohm + Voss is not engineering or designing military equipment, just involved in steel welding and docking. Germany's navy has contributed frigates and other ships to the EU's anti-piracy patrols off the Horn of Africa.

The revelation dominated what was supposed to have been the Vatican's triumphant appointment of a new president for the bank after its last president, Italian banker Ettore Gotti Tedeschi, was fired nine months ago for incompetence.

Gotti Tedeschi's stunning ouster came just as the Vatican was submitting its finances to a review by the Council of Europe's Moneyval committee in a bid to join the list of financially transparent countries.

The Vatican last summer passed the test of the Moneyval committee, which seeks to prevent money laundering and terrorist financing. But the IOR and the Vatican's financial watchdog agency received failing grades.